Why China Arrested Hong Kong Tycoon Jimmy Lai
The billionaire was detained under Beijing’s new national security law. What happens next will set a precedent for the territory’s elite.
Welcome to Foreign Policy’s China Brief. The highlights this week: Why the Hong Kong billionaire Jimmy Lai was targeted under the new national security law, floods in Southern China raise concerns over food security, and how the WeChat ban could affect U.S. firms in China.
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Jimmy Lai’s Arrest Sends a Message From Beijing
The Hong Kong billionaire Jimmy Lai—who heads Next Digital, a pro-democracy media empire mostly known for its newspaper Apple Daily—was arrested in a public spectacle on Monday for allegedly violating China’s new national security law. Several other reporters, activists, and politicians were also arrested the same day, including the popular activist Agnes Chow. They have all been released on bail, but it is unclear whether they will be tried in Hong Kong or in the mainland courts being established for national security cases.
Lai is a rare bird among the Hong Kong elite, who mostly made their peace with the Chinese Communist Party (CCP) as the 1997 handover approached and have generally supported Beijing enthusiastically. Many are members of political bodies in the mainland and use their money to promote CCP influence worldwide. The Hong Kong media, in particular, is dominated by pro-party figures.
Showing support. The recent arrests are part of a series of blows against Hong Kong democracy and civil society under the new law. While growing fears of arrest have restricted street protests, but Hong Kongers showed their support for Lai by buying Next Digital shares en masse, increasing prices by 1,000 percent. Daily newspaper sales of Apple Daily skyrocketed from 70,000 to 550,000.
Asset pillage. Lai is worth around $1.2 billion. One of the major tests of whether any semblance of rule of law remains in Hong Kong will be whether his business empire is carved up among CCP cronies if he is convicted. Dividing the assets of the rich after they fall is a common practice on the mainland, and the Hong Kong elite are already showing signs that they fear widespread official pillage: A significant amount of the territory’s gold was moved following passage of the law.
What We’re Following
Flooding causes food worries. Massive rains in southern China are still causing devastating floods, which have left at least 3.7 million people homeless. The rising waters have hit farmers particularly hard, wiping out entire harvests in the rice-growing south and driving grain prices up by around 20 to 30 percent. Further heavy rains are expected. President Xi Jinping has responded by calling on Chinese not to “waste food” to protect the country’s hard-won food security, renewing the 2013 “Clean Plate” campaign.
Anecdotally, many Chinese households have been stockpiling in the last few weeks out of fears of further coronavirus pandemic lockdowns, floods, and possible conflict with the United States. Xi himself will not go hungry: Party officials are supplied with food through a special system established to make sure banquet tables were full even during times of Maoist famine. Today it provides higher-quality organic goods to avoid the risks of China’s food chain.
Packing woes. The latest casualty of spiraling U.S.-China relations is furniture, according to a Global Times exclusive that revealed that the United States had “brutally unpacked a container with 60 pieces of furniture (official supplies) ordered by the Chinese delegation to the United Nations and dismantled the wrappings of 12 pieces.” The story is ridiculous, but its front-page placement is a sign of how far paranoia about U.S. actions is spreading in China.
The Global Times has promoted other anti-foreign campaigns, such as complaints about Balenciaga ads and theories that U.S. logo changes are a sign of support for Taiwan. The focus on often imagined symbolism is reminiscent of Maoist-era politics.
Trump doubles down. This week, U.S. President Donald Trump again attempted to paint his Democratic opponent Joe Biden as weak on China, saying in an interview that, “If I don’t win the election, China will own the United States. … You’re gonna have to learn to speak Chinese.” The comments follow a line of attack that has largely proved ineffective for Trump. While both Democrats and Republicans have record negative views of China, it is not a political priority for voters.
Tech and Business
WeChat and TikTok bans. The Trump administration marked a major step in the splintering of the global internet with executive orders issued last Thursday banning U.S. transactions with TikTok, the popular video-sharing app, and WeChat, the ubiquitous Chinese app. TikTok seems likely to be sold to Microsoft and is easy to sever from the Chinese ecosystem. The WeChat ban is more significant, given how powerful the app is inside China.
One under-covered aspect of the WeChat ban is how it will affect U.S. firms in China. WeChat is a huge advertising platform, especially through sponsored messages. U.S. firms being banned from placing ads on it would be a considerable burden to their China business, akin to being deprived of TV advertising. But the executive orders are vaguely worded, and it isn’t yet apparent whether the administration would attempt to enforce restrictions on business inside China.
China first. A major economic initiative known as “domestic circulation,” laid out by Xi this year and first reported by the Wall Street Journal, concentrates on prioritizing the Chinese domestic economy and de-emphasizing foreign investment and exports to reduce dependence on non-Chinese markets. While the strategy—which is being implemented by the generally pro-market Vice Premier Liu He—still envisages a strong role for the outside world, it could play into the hands of U.S. strategists keen to decouple the Chinese and U.S. economies.
Despite the outside fascination with China’s planning, the actual course of its growth in recent decades has often been improvised and unexpected. But Xi-era government intervention has inevitably resulted in the growth of the state sector. The role of state-owned enterprises, especially the energy and resource giants, has expanded even further under Xi. Political-economic uncertainty often sees Chinese decision-makers favoring existing power structures.
CCP kids are Hong Kong millionaires. A New York Times investigation reveals that the family of three top CCP officials have luxury homes in Hong Kong worth a total of more than $51 million. The CCP elite’s wealth tends to be spread among their relatives, from Xi’s siblings to former Premier Wen Jiabao’s wife. After previous reports on relatives’ wealth, they have taken greater steps to conceal it, such as removing family names from key documents—making reporting of this kind even harder.
What We’re Listening To
The ChinaPower Podcast from the Center for Strategic and International Studies (CSIS)
The CSIS ChinaPower podcast is always worth listening to, but particularly this week’s episode. The border and military expert M. Taylor Fravel dissects the Galwan Valley clash with India, which killed several dozen Indian soldiers and an unknown number of Chinese, and uses the incident to examine how China approaches territorial disputes.
That’s it for this week.